Research of TAdviser: The largest state procurements of software products and services of Oracle in Russia in 2018

Introduction

The analytical center TAdviser already for the fourth time conducted an annual research of purchases of licenses and technical support services of software products of Oracle (Oracle of Russia and CIS) announced by the Russian state departments and state companies. During the research the purchases announced and made during 2018 were analyzed and also data on the purchases made during 2014-2017 were specified and added.

As a result of profound search on these 2014-2017 (not only on EIS base in the field of state procurements, but also on the main ETPs and corporate portals of purchases) a number of large purchases which for technical reasons were not considered earlier and which significantly changed rankings of Top-50 for these years was revealed. However, edition TAdviser by preparation of this overview made the decision not to make change to earlier published rankings, but to consider all revealed purchases by drawing up new options of a ranking which are presented in the published overview.

This time also, in addition to the ranking of the largest 50 single purchases of licenses which became already traditional and technical support of Oracle, several additional options of a ranking which in total give broader and objective picture for the entire period of observations were made (see the section "Statistics of 2014-2018").

Purchases of software and services of Oracle in Russia – the brief summary

Traditionally main buyers of the licensed software and technical support services of software products of Oracle in Russia are large state also business structures which annual IT budgets make from hundreds of millions to tens of billions of rubles.

As a rule, big customers use software of Oracle as a part of state / corporate information systems, such as ERP CRM EDMS BPM Business Intelligence , etc.

These systems are in commercial operation, have rather stable architecture and user base. The regular purchases connected with software of Oracle belong mainly to software technical support services; new licenses are bought rather seldom and their purchases are caused or expansion of functionality, reliability and performance (in such cases the products licensed on server/processor pricing models are usually purchased), or increase in the user base (such purchases are even more rare since in previous years by many customers user licenses with "stock" purchased).

The Standard Technical Support (STS) means that during its action the customer receives without additional payment all updates of the supported software (both new releases, and the updates connected with correction of technical issues in software), access to the knowledge base of vendor, a certain volume of consultations from technical specialists of vendor or the partner to whom the vendor delegated the rights of rendering technical support.

The Expanded Technical Support (ETS), as a rule is purchased for business and critical applications when it is required to provide the set parameters of performance, recovery speeds after failures, obtaining recommendations about difficult technical issues of operation.

Feature of purchase of services STP softwares of Oracle (as, however, and the majority of products of the western vendors) is that such services should be purchased on a regular basis with the continuity of timelines for delivery of services. If the customer at some point makes the decision to stop payment of services of STP, and later (we will tell, in one or two years) wants to resume receiving any technical support services (standard or expanded), then, by the rules set by vendor, he should pay also earlier passed period when services STP were not rendered. Argue on that, it is fair or not such order, it is senseless – it takes place to be, and all licensees are notified on it. At the same time customers can purchase services RTP at any moment and for any term without observance of the requirement of continuity; the only condition of purchase of services RTP is existence of the operating STP for the period when RTP is required.

With such practice of collection of peculiar "penalties" for the periods of STP which are passed in payment rather headline story is connected with claims of the principal control organ of the country – Accounts Chamber – to one of state customers.

In 2015 the Federal Customs Service (FCS), having signed after a year break the new service contract of standard and expanded technical support cost honor in 178 million rubles, according to Accounts Chamber, overpaid 124 million rubles for these services. Claims of Accounts Chamber were published at the beginning of 2017, after completion of scheduled inspection of a status of informatization in customs authorities of Russia and were the cause, at least, for two publications of one of the leading media specializing in subject IT. Notes under the loud^[1] and "The company which "put" the Chief information officer of FCS lifted up by 3 times the price of one more customs contract for Oracle"^[2] appeared in CNews twice with a break in a year – in March, 2017 and April, 2018 (at the same time, no newsmaker for the repeated publication of old "news" existed).

The summary of this story in the version of 2018 looks so:

The press service of Accounts Chamber explained that the considered purchase according to the results of which contract was received by "RDTECH Reasonable Business Technologies" company was performed by FCS at the beginning of 2015. The purchased services had to be rendered within eight months the same year. Supervising department established that the starting price of the contract in 178.8 million rubles was calculated by method of comparable market prices on the basis of information provided by three potential contractors. One of them — "Croc Inc." — for 2015 turned on in the cost of services the amounts calculated from January 1, 2014 till December 31, 2015 i.e. in many respects outside the timeline for delivery of services set by the tender documentation. Two others — future winner RDTECH and Borlas — included in calculation the price of recovery of technical support of software of Oracle in the amount of 124 million rubles which under the terms of the tender was not required for the customer. These 124 million rubles as a result also appear in documents of Accounts Chamber as an estimated amount of overestimate of the actual price of services.

The fact that neither controllers of Accounts Chamber, nor journalists, apparently, were familiar with features of payment of STP and its recovery after a break because call recovery of technical support of software service attracts attention, "which under the terms of the tender was not required for the customer".

To be fair, it is necessary to notice that later the publication of 4/26/2018 was supplemented with the comment received from the supplier of sensational services – "RDTECH Reasonable Business Technologies" companies:

At holding the auction of 2/26/2015 No. 0173100001515000009 the difference between the planned price of purchase and the price of the contract is caused by need of recovery of Oracle which is missed the period of standard technical support from 1/1/2014 to 4/3/2015. The price of the rendered services was not overstated, as well as provision of services which was not required for the customer did not take place.

So long historical digression was necessary in this overview to emphasize feature of a research of the current year – at its carrying out analysts of TAdviser tried to reveal frequency of signing of the contracts on services STP at main customers and on the basis of this information to define the lower assessment of annual costs for technical support services and also to reveal possible anomalies in actions of customers (the termination of payment of services of STP, irregular service contracts STP).

Results of 2018

Saving tradition of publications of previous years, TAdviser submits the list of 50 largest single purchases of the licensed software and technical support services for the products of Oracle announced and which took place in 2018 (see Tab. 1).

Unlike similar rankings of last years, little changes were made to rules of drawing up the new table:

• The main criterion of ranging is changed - purchases in a ranking are placed not as the announced value of the starting maximum price (SMP) now, and at the price of the signed contract. According to experts of TAdviser, such order of ranging is more correct since reflects real financial flows between customers and suppliers;
• The column in which not won participants of tenders were specified is excluded from the table. Experts of TAdviser considered this information little significant and not reflecting a real competitive situation in the market. Instead of such transfer the overview includes Tab. 5 in which statistics of participation of suppliers in tenders, and the short analysis of preferences of customers concerning specific suppliers is provided (see the section "Observed trends and forecasts");
• The column with register numbers of purchases is also added to the table. The readers who are interested in parts of particular procurements will be able to find by these numbers information in EIS of state procurements. The indication of register numbers of purchases, but not register numbers of government contracts/agreements, was selected on the ground that for many purchases in EIS, unfortunately, there is no information on the signed contracts.

As by preparation of the overview purchases on which contracts were not signed at the time of the research yet were revealed or provided the beginning of performance of the contract and the first payment not earlier than 2019, all such purchases are selected with a marker in the table given below. Those from purchases of 2019 by which suppliers were already determined and contracts were signed, selected with a green marker; the same purchases on which procedures of determination of the supplier did not come to the end or information on suppliers it was not published (as in cases with purchases of the Bank of Russia and Gazprombank) are highlighted in blue color.

For the purchases and contracts nominated in currency, recalculation was carried out to rubles at the rate of the Bank of Russia for date of signing of the contract (it corresponds to the rules existing in EIS). If information on date of signing of the contract was absent (or the contract was not signed yet), as a course of recalculation the average monthly value operating in the period of the publication of purchase or holding competitive procedures was accepted.

In the current version of a research the decision to create a ranking of the largest customers – on the amount of the announced and complete purchases within a year was also made. It is connected with the fact that different customers have different procurement strategies (someone signs the only contract for 3 years, someone signs more than 10 contracts for one year), and total purchasing amounts by customers can significantly differ from a ranking of single purchases.

The ranking of the largest customers at the end of 2018 is presented in Tab. 2. The ranking of the largest customers for all years of observations (2014-2018) is presented in the following section, in Tab. 5.

Tab. 1. Top-50 single purchases in 2018

' №'	Customer	purchase No.	Purchase subject *	NMTsK, rub.	Price of group of companies, rub.	%% snizh.	Term of group of companies	Supplier
1	Sberbank of Russia	31806566769	Software + STP	2,368,452,039.88	2,361,700,265.24	0.29%	2018-2021	Oracle Computer hardware
2	Sberbank of Russia	31806566775	RTP	2,033,776,132.71	2,033,776,132.71	0.00%	2018-2019	Oracle Nederland B.V.
3	Rostelecom	31807284508	STP	1,827,160,416.23	1,738,882,661.44	4.83%	2019-2022	Borlas
4	Sberbank of Russia	31806414379	STP + RTP	574,036,656.55	573,663,661.75	0.06%	2018-2019	Oracle Nederland B.V.
5	FTS (Tax Service)	337100017718000000	STP (software + Exadata)	521,334,017.83	513,514,007.55	1.50%	2019	FORS Technology
6	FTS (Tax Service)	337100017717000000	STP for Exadata HSS	500,713,645.43	483,188,667.85	3.50%	2018	FORS-TsR
7	Rostelecom	31806465415	STP	374,000,000.00	370,260,000.00	1.00%	2018-2019	Borlas
8	Rosatom State Corporation	31806391131	Software + STP	354,000,582.00	348,717,089.92	1.49%	2018-2021	I-Teco
9	Bank of Russia	SBR031-1712080008	STP	349,636,512.21	345,266,055.82	1.25%	2018-2019	RDTECH
10	Rostelecom	31806516333	STP	264,000,000.00	227,757,645.63	13.73%	2018-2019	Borlas
11	Rosselkhozbank	31807327686	STP	145,840,500.00	145,840,500.00	0.00%	2018-2021	N / d
12	Transneft	31806976343	STP	145,659,349.55	145,659,349.55	0.00%	2018-2019	Croc
13	FGC UES	31806248347	Software + STP	158,288,668.31	142,418,554.99	10.03%	2018-2019	System software
14	Rostelecom	31806911414	STP (Fusion)	106,020,000.00	106,020,000.00	0.00%	2018-2021	R.T of the Solution
15	Bank of Russia	SBR031-1810030015	Software / STP (SBP)	94,420,266.12	94,420,266.12	- -	2019-2020	Borlas
16	FCS (TsITTU)	173100015218000000	Software	111,513,998.80	93,671,759.02	16.00%	2018-2019	Vanguard of IT
17	Social Insurance Fund	273100000718000000	STP (software + Exadata)	90,655,513.20	90,655,513.20	0.00%	2019	Sibintek
18	The Social Insurance Fund	273100000718000000	STP for Exadata HSS	90,655,513.20	88,388,444.00	2.50%	2018-2018	Sibintek
19	Data storage center	31806485303	Exadata HSS	86,325,091.12	81,848,180.55	5.19%	2018	Inlayn Tekhnolodzhis
20	Rosneft Oil Company	31705940279	Software	91,871,389.44	81,500,778.24	11.29%	2018	Information protection
21	Gazprombank	GP824255	STP	81,028,730.65	81,028,730.65	- -	2019-2020	N / d
22	DIA Group	31807020992	Software + STP	126,663,960.01	79,164,999.28	37.50%	2018-2019	I-Teco
23	Rosselkhozbank	31806488200	STP	79,991,903.61	78,792,025.06	1.50%	2018-2020	Borlas
24	Rostelecom	31806792462	STP (MSS)	78,057,000.00	78,057,000.00	0.00%	2018-2021	Philosophy. IT
25	Gazprombank	GP825088	STP	73,593,093.37	73,593,093.37	0.00%	2018	N / d
26	Treasury (TsOKR)	895100000118000000	STP	65,520,534.00	65,520,534.00	0.00%	2019-2020	FORS-TsR
27	PSK (S-PB)	31806070912	STP for software and a HSS of Exadata	62,408,491.10	64,457,962.57	-3.28%	2018-2019	Sigma
28	Rosselkhozbank	31806488206	STP	63,122,027.54	63,122,027.54	0.00%	2018-2021	Borlas
29	Treasury (TsOKR)	895100000118000000	STP	66,094,829.53	61,137,717.28	7.50%	2018-2019	Systematics
30	FPC	31807081389	STP	103,932,815.18	58,680,000.00	43.54%	2018-2019	Mobius Tekhnologii
31	PJSC Tupolev	31806158680	Software	70,519,965.60	57,083,083.36	19.05%	2018	Borlas
32	IDGC of Ural	31806830446	Software	54,379,703.12	54,329,067.20	0.09%	2018	Sigma
33	VTB bank	31806721617	Software + STP	53,798,745.37	52,779,366.27	1.89%	2018-2019	Borlas
34	Mosenergosbyt	31807116405	STP	51,197,311.33	50,941,300.00	0.50%	2019-2020	Sigma
35	Vnesheconombank	31807210513	STP	61,657,000.00	49,325,600.00	20.00%	2018-2019	FORS-TsR
36	MSP Bank	31806251552	Software	49,304,305.05	48,980,000.00	0.66%	2018	System software
37	Mosenergosbyt	31806017873	STP	46,542,713.77	45,612,376.00	2.00%	2018	Sigma
38	Aeroflot	31806931985	STP	43,939,468.25	43,939,468.25	0.00%	2019-2022	Borlas
39	SK "Star"	31806959515	Software	43,179,516.00	42,101,944.00	2.50%	2018	Management systems
40	Aeroflot	31807254542	STP	44,000,000.00	42,086,900.00	4.35%	2019-2020	Borlas
41	Mosvodokanal	31807125313	STP (Exadata)	43,491,999.24	39,999,999.99	8.03%	2019-2020	I-Teco
42	PJSC MOEK	31806262758	STP for software and a HSS of Exadata	38,318,818.41	38,318,818.41	0.00%	2018-2019	FORS-TsR
43	PSK (S-PB)	31806938406	STP	35,485,570.00	35,310,403.00	0.49%	2018-2019	N / d
44	JSB Svyaz-Bank	31806306918	STP	35,262,701.37	33,589,406.97	4.75%	2018-2019	Borlas
45	Svyaztransneft	31806312623	STP	32,397,643.22	32,397,643.22	0.00%	2018-2019	RDTECH
46	JSC GSS ("Sukhoi")	31806050698	Software	31,639,500.00	31,639,500.00	0.00%	2018	N / d
47	VTB bank	31806778869	STP	41,600,180.70	30,733,653.49	26.12%	2018-2019	TechnoServ A/S
48	Rostelecom	31806444281	STP	30,332,481.26	30,332,481.26	0.00%	2018-2018	Borlas
49	Svyaztransneft	31806009606	Software	31,568,462.25	30,168,462.03	4.43%	2018-2019	Vanguard of IT
50	NPK "Irkut"	31807185826	STP	30,639,700.00	28,557,598.38	6.80%	2018-2019	FORS-TsR
				11 958 029 462,51	11 588 930 695,16	3,09%

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* Designations of objects of purchase:
Softwares are licenses softwares (the non-exclusive rights of use)
STP – standard technical support
RTP – expanded technical support
HSS – a hardware and software system

By preparation of the overview purchases on which contracts were not signed at the time of the research yet were revealed, or provided the beginning of performance of the contract and the first payment not earlier than 2019. All such purchases are selected with a marker. Those from purchases of 2019 by which suppliers were already determined and contracts were signed, selected with a green marker; purchases on which procedures of determination of the supplier did not come to the end or information on suppliers it was not published are highlighted in blue color.

Let's give small statistical analysis of data from Tab. 1:

1. The most frequent subject of purchases – services of the standard technical support (STS) of software of Oracle. All STP is present at 40 purchases from Top-50 as the only subject of purchase or along with other objects, including – in their two three largest purchases, totally exceeding 4.1 billion rubles. It is obvious that now purchases of services of STP Oracle make the main content of the analyzed market.

2. The non-exclusive rights to use of software (license) are present as a purchase subject at 15 purchases.

3. In two purchases as a subject of purchase services of the expanded technical support (ETS) of software of Oracle are designated. In both cases procurement of services RTP was conducted by Sberbank of Russia and, obviously, intended for support of the softwares business and critical configurations of Oracle, however, more specific purpose of these purchases did not manage to be set since in the declarations of purchases published in EIS there was practically no informative information.

4. Rather steadily among purchases purchases of services STP for a HSS of Oracle Exadata Database Machine began to appear. The first such purchases were detected in EIS of state procurements, since 2012 (prior to the beginning of regular reviews of TAdviser); in the last two years (2017-2018) such purchases already made rather significant share of the market. Among Top-50 of purchases of 2018 of 8 purchases treat STP Oracle Exadata Database Machine; their total volume exceeds 1.4 billion rubles.

Tab. 2. Top-10 customers in 2018 (on total purchasing amount)

' №'	Customer	Number of purchases	NMTsK, rub.	Price of group of companies, rub.	%% snizh.
1	Sberbank of Russia	3	4,976,264,829.14	4,969,140,059.70	0.14%
2	Rostelecom	6	2,679,569,897.49	2,551,309,788.33	4.79%
3	FTS (Tax Service)	2	1,022,047,663.26	996,702,675.40	2.48%
4	Bank of Russia	2	444,056,778.33	439,686,321.94	0.98%
5	Rosatom State Corporation	1	354,000,582.00	348,717,089.92	1.49%
6	Rosselkhozbank	3	288,954,431.15	287,754,552.60	0.42%
7	Transneft + Svyaztransneft	3	209,625,455.02	208,225,454.80	0.67%
8	SOCIAL INSURANCE FUND	2	181,311,026.40	179,043,957.20	1.25%
9	FGC UES	1	158,288,668.31	142,418,554.99	10.03%
10	FCS (ZITA)	1	111,513,998.80	93,671,759.02	16.00%

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These Tab. 2 are rather interesting too:

• The undisputed leader of the market – Sberbank – is the actual market maker; in 2018 on a share of Sberbank of 42% of all market size;
• The first three largest customers having total annual purchasing amounts over 1 billion rubles everyone; jointly occupy 73% of the market.

The planned changes in a ranking technique

Since next year i.e. when the results of the purchases announced and which took place in 2019 are summed up, TAdviser is going to change a technique of formation of a ranking.

The ranking of the analyzed year will join purchases (or parts of purchases) on which payments are provided within the analyzed year. It, according to experts of TAdviser, will allow to provide more objective picture of allocation of costs since some customers announce the largest purchases on which deliveries are implemented two - three - and even and are paid with five-year contracts upon end of separate stages of the contract. Such change can influence rather seriously arrangement of the main market participants in an upper part of a ranking. So, for example, one of the largest in the market the purchase of Rostelecom (more than 1.8 billion rubles) announced in 2018 (and by the operating technique included in a ranking of the current year), actually is only the announcement of costs of Rostelecom for 2019-2021 since the three-year contract on it will begin to be performed only since May, 2019. This purchase will also be reflected in future ranking, but only in the amount of funds, really intended for payment in 2019.

Due to the planned change of a technique, experts of TAdviser consider also the possibility of review of rankings of last years since at them there are purchases implemented by long-term contracts too. As such purchases, as a rule, appeared the customers who are in an upper part of a ranking (not further the 20th position), most likely, the reviewed reduced rankings of last years will be presented in the publication of next year.

Partially these changes in a technique of a ranking planned for next year found reflection and in the published material – TAdviser for the first time presents the rankings of Top-10 of customers and Top-10 of software suppliers and technical support services of Oracle created on the basis of the observations (2014-2018) given for all years – see Tab. 4 and Tab. 5 in the following section.

Statistics of 2014-2018.

The generalized rankings constructed on given observations for the entire period of 2014-2018 are given in this section – for the first time in 5 years of the publication of similar analytical materials.

Tables of this section reflect market situation, than year rankings in much more complete type, and allow to analyze the existing trends and to create forecasts for the visible future.

Purchasing amounts

Aggregated data on purchasing amounts of licenses and technical support services of software of Oracle in 2014-2018 are provided to Tab. 3. Data are grouped by years – till 3 lines of the table for every year. For every year of a cell in the first two columns make the following sense:

• The line "NMTs" contains the amounts of the starting maximum prices of 50 largest purchases;
• The line of "Civil Code" contains the amounts of costs of the contracts corresponding to 50 largest purchases;
• In the line "" the average percent of reduction in cost of contracts calculated on the basis of two above-stated total values is specified.

Informative columns of the table make the following sense:

• In the Top-50 Ref. column the data generalized according to earlier published rankings of TAdviser are submitted;
• In the Top-50 It Is New. column the corrected data of rankings of Top-50 – taking into account in addition revealed large purchases are submitted. At the same time again revealed purchases were located in the modified ranking on the positions corresponding to the price, forcing out the elements of an initial ranking, minimum on values, out of ranking limits;
• In the All Purchases column the total quantity and the amounts of the purchases revealed in all available sources of information – EIS of state procurements, specialized sections on the largest ETPs, corporate portals of purchases are provided.

Tab. 3. Aggregated data on purchases of licenses and technical support services of software of Oracle in 2014-2018.

'	'	Top-50 ref.	Top-50 is new.	All purchases	Share of Top-50, %
2014	NMTs, rub	4,751,598,082	6,275,295,173	7,175,102,024	87.5%
	Group of companies, rub	4,563,257,754	5,872,493,277	Number of purchases - 550+
	∆, %	3,96%	6,42%
2015	NMTs, rub	3,507,071,344	7,715,838,898	8,736,459,065	88.3%
	Group of companies, rub	3,391,247,421	7,461,680,751	Number of purchases - 510+
	∆, %	3,30%	3,29%
2016	NMTs, rub	4,398,313,085	7,651,437,761	9,341,503,268	81.9%
	Group of companies, rub	4,211,378,837	7,327,394,490	Number of purchases - 460+
	∆, %	4,25%	4,24%
2017	NMTs, rub	7,337,348,619	10,057,687,876	11,179,057,472	90.0%
	Group of companies, rub	7,026,143,335	9,590,025,968	Number of purchases - 380+
	∆, %	4,24%	4,65%
2018	NMTs, rub		11,958,029,463	13,325,960,681	89.7%
	Group of companies, rub		11,588,930,695	Number of purchases - 250+
	∆, %		3,09%
			43 658 289 171	49 758 082 510	87,7%

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The essential difference between total purchasing amounts in the initial and modified options of a ranking Top-50 (by 1.5-2 times within every year) is explained by the following reasons:

• In EIS of state procurements (the main source of data for drawing up a ranking) during the research earlier being absent data on many large purchases were revealed. So, for example, only in 2018 short data on two by the largest (totally more than 3 billion rubles) to the purchases of Sberbank which took place in 2015 were published. For a number of the purchases made at the only supplier in EIS the documents which allowed to identify these purchases as belonging to software of Oracle were detected;
• Considerable volumes of earlier unaccounted costs for licenses and technical support of software of Oracle were revealed as a part of total government contracts. For example, in the contracts consisting Federal State Unitary Enterprise Nalog-Service (subordinated organization of the Federal Tax Service) in 2015-2018 during the equipping and operation of a system of DPC of the Ministry of Finance of the Russian Federation (Federal State Unitary Enterprise Nalog-Service manages these DPCs) volumes of profile costs were from 200 to 600 + one million rubles in each contract - totally nearly 3.7 billion rubles. It should be noted that, considering the contracts "Tax Service", experts of TAdviser made the decision to consider when forming a ranking of costs for technical support of the hardware and software systems Oracle Exadata Database Machine as these specialized servers optimized for work with Oracle DBMS and the accompanying instrumental and architectural means often are considered as uniform object of technical support;
• A number of large purchases of such customers as the Bank of Russia, Gazprombank, Rostelecom, for the amounts of several honeycombs of millions of rubles everyone was detected not in EIS, and on other trade and purchasing platforms – Sberbank-AST ETP, Gazprombank ETP, the purchasing portal of Rostelecom.

Analyzing the data provided to Tab. 3, it is possible to draw several conclusions on the trends observed in the market:

• Total annual purchasing amount shows stable growth year by year. Small visible decrease in 2018 relatively 2017 (11.18 billion against 10.46 billion) is "optical effect" because as it was mentioned above, in the purchasing amount of 2018 purchases by the amount more than 3.6 billion rubles on which contracts begin to work only in 2019 are not considered. Of course, increase in costs for technical support substantially is explained by almost double growth of dollar exchange rate to ruble after 2014 (though, it is known that the western vendors rather flexibly manage the prices at sharp jumps of currency rate – from rate fixation for a certain period before providing the special prices and discounts), but also market size in quantitative expression (on number of licenses) remains rather stable and even grows;
• • Total number of purchases decreases year by year that with a stable growth of total purchasing amounts means centralization of purchases within large corporate structures (VTB, Rosatom, Transneft) and, as a result, increase in average cost of contracts. This trend is confirmed and by comparison of annual rankings of Top-50 – in 2014 the last 10 purchases in a ranking had the starting prices from 17.2 to 11.5 million rubles, and in a ranking of 2018 the range of the starting prices of the last ten was already from 43.5 to 30.6 million rubles;
• Average reduction in cost of contracts in comparison with announced by the starting maximum price (SMP) of purchase is in range of 3-5%. The isolated cases of decrease in NMTs observed by detailed consideration of separate rankings for 10-20% and more are the exceptions caused by the overestimated assessment of NMTs when forming parameters of purchases more likely. It is characteristic that similar cases of rather sharp decrease in NMTs are observed at the same customers (for example, VTB, Transneft).
• At a total quantity of purchases from 550+ in 2014 to 250+ in 2018 the total volume of the largest 50 purchases included in an annual ranking is from 80 to 90% of total amount of the market. At the same time the detailed analysis of rankings shows the same trend in rankings in relation to the largest customers and suppliers (see below).

The largest customers, suppliers and contracts

Rankings on separate categories – the largest customers, suppliers and contracts – for the entire period of observations are for the first time presented in this section. According to analysts of TAdviser, such groupings of data allow to provide market situation more fully and from different viewing angles.

The ranking of Top-10 of customers on volumes of costs for licenses and technical support of Oracle for the period 2014-2018 with breakdown by real costs (effected payments) within every year is presented in Tab. 4. For drawing up this table analysts of TAdviser needed to analyze completion dates and conditions of payments on all largest customers. The amount of purchases not less than 1 billion rubles for the period of observation was border of cutting off.

When forming of the specified ranking of analytics of TAdviser grouped the purchases made by the different customers entering into structure of large corporations / holdings under the uniform name of parent organization. So, for example, purchases of several child organizations of Gazprom, Transneft, Rosatom, VTB Bank were joint.

Such grouping was made, proceeding from the following observed facts:

• Rather often the organization customer (at all not necessarily it happens the head company) announces purchase, obviously specifying that it is made for the benefit of several organizations entering into uniform structure of group/corporation; such purchases usually contain several lots, and based on purchase several contracts are signed. But there are also return situations – purchase appears and carried out on a centralized basis, the uniform contract in which specification specific receivers of licenses and technical support are listed is signed;
• Periodically happening associations of customers (as, for example, happened to VTB and VTB 24 banks in 2017) lead to consolidation of IT assets and, as a result, to distribution of operation of earlier signed contracts for again created IT infrastructure.

Are presented in table 4:

• Total purchasing amounts on each customer, announced within every year (including purchases on which payments had to happen in the years ahead);
• Payment amounts according to current contracts (one-year and long-term) within every year;
• The number of the purchases announced by the customer within a year (the All column in group of columns every year) and the number of the purchases which got to a ranking of Top-50 for every year (the Top column in group of columns every year).

The ranking of Top-10 of software suppliers is presented to total amounts of the contracts signed for the period 2014-2018 (on condition that the contract is/was acting and within it payments were already made) in Tab. 5.

Are presented in table 5:

• The amounts of the contracts signed by suppliers within every year of the observed period (except for contracts which are signed in 2018, but will begin to be performed only in 2019);
• The number of competitive procedures in which each supplier within a year and the number of the contracts signed as a result of victories in tenders participated (the Tenders and Contracts columns in group of columns every year);
• The number of customers with whom contracts within every year were signed.

It should be noted that already next year, taking into account the beginning of action of the large contract with Rostelecom, to the second place among suppliers there will be a Borlas company.

The ranking of Top-25 of the contracts signed during 2014-2018 (taking into account contracts which are signed in 2018, but will begin to be performed only in 2019) is presented in Tab. 6. Previously as the lower bound of cutting off for a ranking the cost of the contract not less than 500 million rubles was selected, but in the course of formation of the list 5 more contracts with close cost were added to a ranking. The total cost of all contracts – 23.2 billion rubles.

In total contracts of eight customers got to a ranking. Distribution of contracts by customers following:

• Sberbank – 8 contracts, the amount – 9.63 billion rubles;
• Rostelecom – 4 contracts, the amount – 4.54 billion rubles;
• FTS Russia – 6 contracts, the amount – 3.27 billion rubles;
• VTB 24 – 3 contracts, the amount – 2.91 billion rubles;
• Gazprom Inform – 1 contract, the amount of 820.7 million rubles;
• Transneft – 1 contract, cost – 695.2 million rubles;
• Aeroflot – 1 contract, the amount – 669.8 million rubles;
• Federal Treasury of the Russian Federation – 1 contract, cost – 693 million rubles.

Tab. 4. Top-10 customers on total purchasing amounts for 2014-2018 (the amounts – in one thousand rub)

Tab. 5. Top-10 suppliers under total volumes of contracts for the period 2014-2018.

Tab. 6. Top-25 the contracts signed for the period 2014-2018.

   | ||||||||||23 241 307 600,62||||

' №'	Year	Customer	Supplier	purchase No.	Price of group of companies, rub.	Term of group of companies	Subject of the contract
1	2018	Sberbank of Russia	Oracle the Computer hardware	31806566769	2,361,700,265.24	2018-2021	Acquisition of software licenses and services of standard technical support for term in 3 years. Purchase at the only supplier
2	2018	Sberbank of Russia	Oracle Nederland B.V.	31806566775	2,033,776,132.71	2018-2019	Acquisition of services of expanded technical support (term - 1 year). Purchase at the only supplier
3	2016	Rostelecom	Asteros	31603718871	1,814,309,792.30	2018-2020	Acquisition of software licenses and services of standard technical support for term in 3 years
4	2015	Sberbank of Russia	Oracle Nederland B.V.	31806296002	1,742,101,725.00	2015-2018	Acquisition of services of standard technical support for term in 3 years. Purchase at the only supplier
5	2019	Rostelecom	Borlas	31807284508	1,738,882,661.44	2019-2022	Acquisition of services of standard technical support for term in 3 years
6	2017	VTB 24	Asteros	31705135451	1,554,583,100.00	2017-2020	Acquisition of software licenses and services of standard technical support for term in 3 years
7	2015	Sberbank of Russia	Oracle Computer hardware	31806296001	1,349,996,357.43	2015	Acquisition of software licenses. Purchase at the only supplier
8	2014	VTB 24	Asteros	31401152078	857,834,533.68	2014-2017	Acquisition of software licenses and services of standard technical support for term in 3 years
9	2017	Gazprom Inform	Gazprom avtomatizatsiya	31705013373	820,684,598.36	2017-2018	Acquisition of software licenses and services of standard technical support of software and HSS of Oracle for term in 1 year. Purchase at the only supplier
10	2015	Transneft	USP Compulink	31502589289	695,211,055.02	2015	Acquisition of software licenses
11	2014	Treasury	Rusinform service	0173100003013000037	693,000,000.00	2014-2015	Acquisition of services of standard technical support for term in 1 year
12	2017	Aeroflot	Borlas	31705370866	669,882,503.69	2017-2020	Acquisition of services of standard technical support for term in 3 years
13	2016	FTS (Tax Service)	IBS Examination	0337100017716000010	638,326,131.00	2016	Acquisition of a HSS of Oracle Exadata Database Machine, software licenses and services of standard technical support for term in 1 year. Equipping and operation of a HSS of an industrial circuit of a transaction segment of the AIS "Tax-3" and "ASK NDS-2" in a federal data processing center of FTS in Dubna
14	2016	FTS (Tax Service)	IBS Examination	0337100017716000009	634,850,568.00	2016	Acquisition of a HSS of Oracle Exadata Database Machine, software licenses and services of standard technical support for term in 1 year. Equipping and operation of a HSS of reservation of data of an industrial circuit of a transaction segment of the AIS "Tax-3" and "ASK NDS-2" in a federal data processing center of FTS in Dubna
15	2014	Sberbank of Russia	Oracle Nederland B.V.	31401097928	606,905,070.15	2014-2015	Acquisition of services of standard and expanded technical support (term - 1 year). Purchase at the only supplier
16	2018	Sberbank of Russia	Oracle Nederland B.V.	31806414379	573,663,661.75	2018-2019	Acquisition of services of standard and expanded technical support (term - 1 year). Purchase at the only supplier
17	2014	Rostelecom	Borlas	31300763303	517,517,058.61	2014	Acquisition of services of standard technical support for term in 1 year
18	2019	FTS (Tax Service)	FORS Technology	0337100017718000223	513,514,007.55	2019	Rendering service in system maintenance of the equipment and the software for needs of Federal State Institution "Nalog-Service" of FTS
19	2017	FTS (Tax Service)	FORS-TsR	0337100017716000202	503,806,284.00	2016-2017	Supply of equipment, transfer of the non-exclusive rights to use of the software and execution of works for the purpose of upgrade of a hardware and software system of reservation of data of an industrial circuit of a transaction segment of the AIS "Tax-3" in DPC of FTS in Dubna
20	2017	FTS (Tax Service)	FORS-TsR	0337100017716000203	501,086,344.00	2016-2017	Supply of equipment, transfer of the non-exclusive rights to use of the software and execution of works for the purpose of upgrade of a hardware and software system of an industrial circuit of a transaction segment of the AIS "Tax-3" and "ASK NDS-2" in DPC of FTS in Dubna
21	2015	VTB 24	Open technologies 98	31502381177	498,695,691.90	2015-2016	Supply of equipment of Oracle of category Engineered Systems, component parts to it, the software of Oracle company, execution of works on installation, installation and a commissioning of the supplied equipment, rendering services in support of the equipment and the software
22	2015	Sberbank of Russia	Oracle Nederland B.V.	31502396866	486,673,725.77	2015	Acquisition of services of expanded technical support (term - 1 year). Purchase at the only supplier
23	2018	FTS (Tax Service)	FORS-TsR	0337100017717000328	483,188,667.85	2018	Rendering services in system maintenance of the equipment and software of Oracle
24	2017	Sberbank of Russia	Oracle Nederland B.V.	31705070575	479,117,665.17	2017-2018	Acquisition of services of expanded technical support (term - 1 year). Purchase at the only supplier
25	2014	Rostelecom	Borlas, RDTECH	31401847767	472,000,000.00	2015-2016	Rendering technical support services of the software of Oracle

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Sberbank and Rostelecom – market leaders

Sberbank of Russia

The Sberbank of Russia is the absolute leader in purchasing amounts of the licensed software and technical support of Oracle. On the account of Sberbank of the two first places in a ranking of Top-25 of the largest purchases for 2014-2018 (see Tab. 6) and leadership in annual purchasing amounts (with recalculation of long-term contracts for the year periods of payments) in 2015 and 2018 (see Tab. 4). Besides, Sberbank is the absolute leader in the total amount of purchases of software and technical support of Oracle in 2014-2019 – more than 10.7 billion rubles (including and contracts under which payments will come in 2019-2021) – see Tab. 7. Considering that assessment of volumes of all market for 2014-2018 makes about 45-46 billion rubles, only one Sberbank creates nearly a quarter (23%) of the market. The share of Sberbank is in annual calculation approximately at the same level.

In 2018 Sberbank concluded two bargains (2.361 billion rubles and 2.033 billion rubles) which became the largest for the entire period of observations of TAdviser (2014-2019), and the second in value of these transactions became the largest among all year contracts of all customers.

Practically Sberbank performs all purchases (both new licenses, and services for technical support) at only two suppliers – the Russian representative office of Dutch 'subsidiary' of vendor "Oracle Nederland B.V." and Oracle Computer Hardware companies (the former SAN Maykrosistems Ltd). Also the fact that all procurements are conducted at the only supplier, without the declaration of tenders is characteristic.

Unfortunately, in EIS of state procurements there are no data on technical specifications of contracts of Sberbank – only minutes of meetings of the tender committee of Sberbank approving the cost of contracts and completion dates are provided as procurement documentation. According to indirect data it is possible to draw a conclusion that at "Oracle Nederland B.V." licenses and technical support of the main software products Oracle connected with DBMS, and at "Oracle the Computer hardware" - licenses and technical support of Oracle Siebel CRM were bought. By the way, Sberbank is nearly only customer (the second and the last – Rostelecom) who buys services not only standard, but also expanded technical support.

Till 2015 Sberbank signed year service contracts of technical support, and since 2015 passed to the conclusion of three-year contracts – the first such contract worked from 2015 to 2018, the second (acting for March, 2019 has time frames of 2018-2021).

Information on purchases of Sberbank regarding licenses and technical support of Oracle is published extremely irregularly and not in full. The purchase of licenses of Oracle with the price of 1.7 billion rubles at "Oracle Nederland B.V." company which was allegedly taking place in 2017 was mentioned in a last year's ranking of TAdviser (even the room of this purchase in EIS – 31704855510 is known, - where data on the agreement for the specified amount were originally published, however, later the amount was nullified, and in data on the agreement the comment on a technical error appeared). It was reported that Sberbank is going to publish the corrected data on this agreement in EIS a little later. However, at data collection for this overview traces of the mentioned purchase were not detected and therefore purchase (if it also was) was not considered in all rankings of the current overview. However, even if as a result information on this purchase after all will appear in EIS, it will not make any basic changes to rankings: Sberbank already is the largest customer, and "Oracle Nederland B.V." company - the largest supplier.

Information on two more very large purchases of Sberbank which took place in 2015 was published in EIS of state procurements only in March, 2018 (purchases with numbers 31806296001 and 31806296002, in the amount the exceeded 3 billion rubles), however, information on both purchases in EIS is not enough – only the protocols of the procurement commission of Sberbank which approved results of purchases dated 2015. It is characteristic that there is no information on these purchases also in personal trade section of Sberbank on Sberbank-AST ETP.

Tab. 7. Sberbank of Russia – purchases of software and technical support services of Oracle in 2014-2018.

   | ||||||||||10 760 984 451,96||||

' №'	Supplier	purchase No.	Purchase subject	NMTsK, rub.	Price of group of companies, rub.	%% snizh.	Term of group of companies
1	Oracle Computer hardware	31806566769	Software + STP	2,368,452,039.88	2,361,700,265.24	0.29%	2018-2021
2	Oracle Nederland B.V.	31806566775	RTP	2,033,776,132.71	2,033,776,132.71	-	2018-2019
3	Oracle Nederland B.V.	31806296002	STP	1,742,101,725.00	1,742,101,725.00	-	2015-2018
4	Oracle Computer hardware	31806296001	Software	1,349,996,357.43	1,349,996,357.43	-	2015
5	Oracle Nederland B.V.	31401097928	STP + RTP	606,905,070.15	606,905,070.15	-	2014-2015
6	Oracle Nederland B.V.	31806414379	STP + RTP	574,036,656.55	573,663,661.75	0.06%	2018-2019
7	Oracle Nederland B.V.	31502396866	RTP	486,673,725.77	486,673,725.77	-	2015
8	Oracle Nederland B.V.	31705070575	RTP	479,117,665.17	479,117,665.17	-	2017-2018
9	Oracle Nederland B.V.	31603504026	RTP	428,297,756.00	428,297,756.00	-	2016-2017
10	Oracle Computer hardware	31705167596	Software + STP	273,548,372.63	273,548,372.63	-	2017-2018
11	Oracle Nederland B.V.	31603503976	STP	206,416,397.33	206,416,397.33	-	2016-2017
12	Oracle Nederland B.V.	31704855510	STP	151,025,753.81	151,025,753.81	-	2017-2018
13	Oracle Computer hardware	31705275802	STP	38,061,568.98	38,061,568.98	-	2017-2018
14	Basic technologies	31806963350	RTP	30,000,000.00	29,700,000.00	1.00%	2019

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Rostelecom

Only Rostelecom – on the account of telecom operator as it was already mentioned above, 4 purchases from Top-25 list of the largest single purchases is capable to compete with Sberbank on the largest purchases. The company also became the leader in the general annual purchasing amount in 2016 and on the volume of payments within current contracts in 2018. Holds Rostelecom and the general second place on purchasing amount in 2014-2019 – 6.75 billion rubles.

Since 2016, Rostelecom signs basic contracts on rendering services of the standard technical support (STS) of software products of Oracle, as a rule, for a period of 3 years, with a standard effective date of the contract at the end of May – the beginning of June.

The previous (still existing) contract was signed in 2016 (and was that year the largest single purchase of services of Oracle); operation of this contract expires at the end of May, 2019. It will be succeeded by already signed contract valid through the end of May, 2022.

Purchases of Rostelecom, unlike purchases of Sberbank, are well documented – it is possible to find in EIS of state procurements not only the technical specification of all software of Oracle which was purchased and used by Rostelecom, but the maximum cost of STP of licenses proceeding from which the starting price of purchase of Rostelecom in 2018 formed – 1.827 billion rubles (the contract is signed for the amount of 1.739 billion rubles) – see Tab. 8.

From the table it is visible that practically all main licenses of Oracle used at creation/operation of corporate ICs of Rostelecom are purchased for unlimited number of users. The most expensive in support is the server license Oracle Database Enterprise Edition for which services STP it is annually necessary to pay more than 246 million rubles (including VAT and the final cost of the contract which reduced the purchase price for 4.8%).

Tab. 8. Single quotations on services STP in purchase of Rostelecom of 2018.

|Oracle Real Application Clusters||Processor||UNLIMITED||19 226 314,12|Oracle Hyperion Planning Plus|| Application User||UNLIMITED||16 617 936,28|Oracle OLAP ||Processor||UNLIMITED||3 569 061,96

Name software	Licensing metrics	Quantity (piece)	Single quotations, rub/year, excluding VAT
Oracle Advanced Analytics	Processor	UNLIMITED	2 823 814,13
Oracle Partitioning	Processor	UNLIMITED	35 801 491,77
Oracle Diagnostics Pack	Processor	UNLIMITED	1 221 410,84
Oracle Advanced Compression	Processor	UNLIMITED	1 430 662,40
Oracle Database Enterprise Edition	Processor	UNLIMITED	219 128 926,87
Oracle Tuning Pack	Processor	UNLIMITED	965 338,23
Oracle Active Data Guard	Processor	UNLIMITED	1 363 498,84
Oracle Label Security	Processor	UNLIMITED	1 458 551,46
Oracle Spatial and Graph	Processor	UNLIMITED	1 104 970,75
Oracle Business Intelligence Suite Extended Edition	Processor	UNLIMITED	9 067 683,37
		Amount excluding VAT	313,779,661.02
		The amount with the VAT	370,260,000.00

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The second largest component of annual expenses of Rostelecom is support of licenses of Oracle E-Business Suite (OEBS). In the company these licenses are distributed on macroregional branches (MRF) which for March, 2019 only 8; the total number of the licenses OEBS which are in use at MRF of Rostelecom is more than 37700 pieces. Annually Rostelecom will have to pay nearly 120 million rubles for services STP in these licenses.

But it is necessary to understand that Rostelecom buys licenses of Oracle and their technical support not only for own needs, but also for providing in lease (as a part of virtual a HSS) to customers of services of DPC of Rostelecom among whom there is a number of federal agencies – the Ministry of Telecom and Mass Communications, Rosreestr, etc.

Observed trends and forecasts

Some observations and forecasts of analysts of TAdviser which are based on data in Tab. 3 are presented in this section. Tab. 6.

Market size

In general, the market of licenses and technical support services of software of Oracle for March, 2019 is in rather stable status (annual volumes in 2016-2018 within 9-11 billion rubles – see Tab. 3), showing smooth growth in the last 3 years (once again we remind that small decrease in annual volume in 2018 in comparison with 2017 is caused by a technique of calculation and reference of a number of purchases with a total capacity more than 3.6 billion rubles by 2019).

Market main growth drivers:

• growth of dollar exchange rate to ruble and change of the vendor prices,
• increase/modification of license base at the largest customers (Sberbank, Rostelecom)
• expansion of use of a HSS Oracle Exadata Database Machine at creation of large DPCs in the state and corporate sectors.

With high probability it is possible to believe that total market sizes approached "plateau" and in the next 3-5 years volumes of annually announced purchases will not exceed 12-13 billion rubles. Stability of the market is affected by the following factors:

• Need of regular purchase of services STP by the main pool of customers (10-15 largest customers creating more than 80% of all market size);
• Strong dependence of main customers on the IT infrastructure which is based on software both a HSS of Oracle, and extremely slow following to the announced import substitution policy;
• Rather far delayed time border (2024) when at the companies with state participation the level of use of domestic solutions has to be not less than 70%.

Competition and activity of suppliers

It is not necessary to tell about the serious competition of suppliers in the considered market though in separate tenders presence of 4-5 participants and rather serious decrease in the starting price of purchase was noted. As a rule, real competitive fights took place on rather purchases, modest on volume (of course, on the scale of the considered market) – ranging from 20 to 100 million rubles. In larger purchases it is occasionally possible to observe two procurement participants, and, and by names of participants, and according to their requests it is clear at once who is a favourite of tender. So, in 2018 in the first 20 purchases of a ranking of Top-50 approximately in half of cases (apart from purchases of Sberbank) only one participant came on tenders. It, obviously, says that participation of suppliers in large tenders is controlled by vendor which "parts" the partners in different customers.

Activity of suppliers at tenders and the number of the contracts signed by them not always correlate with a total volume of these contracts. So, for the entire period of observations by the most active participants of tenders were:

• Borlas Group - 43 tenders, 26 contracts, total amount of contracts is 4.6 billion rubles;
• FORS (all companies of group) – 50 tenders, 30 signed contracts, the total amount of contracts of 3.555 billion rubles;
• RDTECH – 59 tenders, 28 contracts, the total amount of contracts is 1.243 billion rubles;
• Croc – 38 tenders, 15 contracts, the total amount of contracts 763 + one million rubles.

So the rule "The wolf of a leg is fed" in the considered market not really and works.

Customers and suppliers – steady alliances

In total, for the five-year period of observations the ranking of TAdviser included more than 80 customers (in 2018 – 31) and more than 60 suppliers (in 2018 – 29). The analysis of TAdviser shows that in a number of cases there are rather steady alliances between customers and suppliers, and, as a rule, the alliance of subjects is steadier, than purchasing amount at the customer is larger.

The most striking examples of such alliances – Sberbank of Russia and two Russian representative offices of vendor, "Oracle Nederland B.V." and "Oracle Computer Hardware" company. For all history of observations of TAdviser at Sberbank of Russia from 14 signed contracts connected with software of Oracle, 9 contracts are signed about "Oracle Nederland B.V.", and from other five - four are imprisoned about "Oracle the Computer hardware". The volume of contracts more than 10.7 billion rubles totally are the share of these two suppliers (more than 99% of all volume of contracts for 2014-2019). And, contracts with these two suppliers were always signed without tender and practically without decrease in the starting price of purchase.

It is interesting as well the back of these alliances. The "Oracle Nederland B.V." company, in addition to contracts with Sberbank, had only two small contracts with other customers (one with Rosneft and one more with JSC UEK), and the Oracle Computer Hardware company had no contracts with other customers in the software direction of Oracle at all. By the way, the Oracle Computer Hardware company is for Sberbank also technical support provider of the hardware and software systems Oracle SuperCluster, but there costs of the published contracts do not exceed 18-20 million rubles.

It would be logical to expect that other customers from the top ten of a ranking also should have steady alliances with suppliers. To some extent, it so:

• Rostelecom. Prime vendors – Asteros (since 2018 – the bankrupt) and Borlas, for two they concluded contracts more, than for 5.9 billion rubles (including the three-year contract for 1.7 billion rubles which is becoming effective in May, 2019) from the total amount of contracts of 6.4 billion rubles;
• VTB (including VTB Bank, VTB 24 and Bank of Moscow). In total contracts for 2014-2018 – 27; total amount of contracts – 4.4 billion rubles. Prime vendors: Asteros – 2.4 billion rubles (2 three-year contracts with VTB 24), Technoserv – 772 million rubles (3 contracts), "Open technologies 98" - 498 million rubles (1 contract), RDTECH – 434+ million rubles (11 contracts);
• Aeroflot: prime vendors – Borlas and Technoserv. However, (totally 1.2 billion rubles from the total amount of contracts 1.3 + one billion rubles) Borlas got all largest contracts;
• Transneft (including child structures): prime vendors – USP Compulink and Rusinform Service. The first of the called suppliers signed 4 delivery contracts of licenses and technical support for the amount honor in 940 million rubles. The second company not really known in the market (and for March, 2019, by data SPARK-Interfax being in a reorganization status), in 2014-2016 was a prime vendor of technical support services of Oracle for Transneft, having signed with it during this period of 11 contracts for total amount nearly 400 million rubles.

However, risk factor at existence of such alliances is the dependence on service provider whose stability in business can appear suddenly under the threat. So, the Asteros company which signed in 2017 with VTB 24 bank the three-year contract worth more than 1.5 billion rubles in 2018 was announced by the bankrupt. In EIS of state procurements there is no information neither on the initial contract revision, nor on its status after 2018 – most likely, the contract remains formally acting, but really the VTB Bank which integrated with VTB 24 receives all necessary technical support services from other supplier, and this situation will be in the near future solved through the conclusion of other contract. It is possible that Technoserv which co-owner since 2018 just and is VTB will become the supplier.

Risks

Pacing factors of risk for the considered market are:

• economic sanctions of the USA (for March, 2019 mainly directed against an oil and gas sector) and their influence on the policy of vendor in Russia;
• the course towards import substitution of foreign software announced in Russia and prohibition of purchases of foreign software for public institutions / organizations and companies/corporations with state equity participation.

Sanctions – not to attack

In Russia of the equipment, the licensed software of Oracle and the related services for the first time started talking about possible restrictions for sales in 2014 when the directive of the Ministry of Finance of the USA No. 4 of sectoral sanctions of September 12, 2014 devoted to export control concerning the oil and gas industry of the Russian Federation was announced. Sanctions provided for the American companies cooperating with the Russian oil and gas companies, restrictions (up to a total ban) for sale of products and services. Then, in 2014, restrictions were introduced only concerning projects on development of deep-water, sea Arctic and slate fields in the Russian Federation or in its territorial waters belonging to the Russian companies entered in the sanctions list.

On October 31, 2017 the Ministry of Finance of the USA updated directive No. 4 and restrictions extended to projects irrespective of their location if the company entered in the sanctions list on the basis of directive No. 4 possesses not less than 33% of share or the majority of voting rights.

According to the updated sanctions directive, the Oracle company in the middle of January, 2018 warned the Russian partners about observance of the added sanctions requirements of the USA directed to customers of an oil and gas sector by it. Prohibition extends to the projects starting on January 29, 2018 or later. Restriction also concerns any vozobnovleniye, changes or prolongation of already concluded contacts. It does not extend only to providing financial services, for example, on accounting or insurance. The transactions which are not conforming to requirements can be delayed or rejected, Oracle in the letter warned.

The list of the companies falling under sanctions enclosed to the letter – all in it there were 283 names, including the enterprises of Gazprom, Rosneft, Lukoil and "Surgutneftegas^[3].

From the companies of an oil and gas sector (including child structures) are present at a ranking of TAdviser Gazprom (on behalf of Gazprombank, Gazprom Inform and "Gazprom mezhregiongaz of SPb"), Rosneft (the head company of group and 3 subsidiary companies), Transneft (the head company and several "subsidiaries") and Bashneft.

Totally on the company of the Gazprom group in 5 years of observations it was the share purchases of total amount more than 2 billion rubles – more than 1.5 billion rubles make purchases of Gazprom Inform (that is not surprising since GPI is IT insourcer of the Gazprom group) of them and about 450 million rubles of purchase of Gazprombank. The largest purchase was made by GPI in 2017 – more than 820 million rubles (the contract on technical support for 2 years); in 2018 purchases in the direction of Oracle at GPI are not mentioned. Perhaps, the two-year contract of 2017 just was also signed waiting for possible toughening of sanctions, but for March, 2019 it is already complete, and there is no information on the new contract yet. In principle, as shows experience of the Russian Railway, at a stable configuration of software tools it is possible to do also without external technical support. But whether really GPI decided not to buy technical support services of software of Oracle any more or the declaration of purchase dragged on for any internal reasons, it will become clear later.

At Rosneft if to judge by the purchases included in a ranking, the need for licenses and technical support of software of Oracle is significantly lower, than - for 4 years the company only two times bought technical support services from Gazprom (totally for 86+ million rubles) and once – licenses (apparently, it was converting of the referred to as user licenses on access to DBMS in server). Three more purchases with a total cost about 89 million rubles (twice – licenses, once – support services) performed subsidiary companies of Rosneft. In 2018 the only purchase contract of licenses (it is considered in a ranking of 2018), according to which procurement procedures were begun in 2017 was signed. Obviously, from toughening of sanctions and possible restrictions of deliveries of software and support of Oracle, Rosneft will not suffer very strongly.

From all the companies of an oil and gas sector called above which are present at a ranking, the most active buyer of software and services of Oracle is Transneft - in 5 years of observations the company announced more than 30 purchases for the total amount more than 2.4 billion rubles and signed contracts for total amount almost of 2.2 billion rubles. At the same time the Transneft company actively bought licenses and support of software of Oracle in 2018 – 3 purchases for the total amount more than 208 million rubles and 3 more cancelled or postponed for later dates purchases with a total amount more than 178 million rubles. Most likely, the Transneft company is absent in the sanctions list of the Ministry of Finance of the USA – otherwise, when toughening sanctions of Transneft it is necessary hardly since products of Oracle are actively used both in the head company, and in its numerous "daughters".

Import substitution is almost not visible

By the known "prohibitive" order of the Government of the Russian Federation No. 1236 of November 16, 2015 (further – software 1236) it is established that if the state customer intends to purchase foreign software which has a domestic analog included in the register of the Russian software he is obliged to motivate in writing it with the separate document as a part of the tender documentation.

In three years which passed from the moment of the beginning of action of prohibition on purchase of foreign software by the Russian state structures and the companies with state participation the popular wisdom repeatedly found confirmation: "If it is impossible, but there is a strong wish – that is possible". For March, 2019 practically at all state customers texts of justifications of impossibility of observance of the specified prohibition which if necessary join in purchase materials are had. And very few people remember that the Oracle company became scandalous "pioneer" in preparation of such justifications once.

At the beginning of 2016 in the Russian IT community a lot of noise a story about mailing by the Russian product suppliers of Oracle to the clients state customers of the multipage text bearing on itself signs of explicit origin from Oracle company and containing comparisons arguments against PostgreSQL DBMS included in the register of the Russian software for benefit of Oracle DBMS^[4]Did^[5]. Then even the leading Russian business newspaper Vedomosti^[6] paid to this subject attention ^[7]:

The note with the analysis of shortcomings of the PostgreSQL database management system (DMS) – the product open source developed by community of programmers from the different countries was at disposal of Vedomosti. Development based on this system can be included in the register of the domestic software (S) as Oracle DBMS alternative, follows from a note on which there is a logo of Oracle.

The note dispersed from such contents among the Russian IT companies, the staff of three IT integrators knows. Two say that their companies received it from Oracle.

Having a little made a noise, scandal came to naught without any serious effects for vendor (except for short-term damage to a goodwill which, however, not really strongly affected financial results), but by March, 2019 practice of preparation of the "correct" justifications extended significantly and enriched with the numerous samples written in the good literary language and with obligatory existence of lethal arguments for a prohibition bypass.

Among state customers for whom prohibition on purchases of foreign software works since 2016 not much permanent participants of a ranking of TAdviser – FTS (on behalf of the "subveda" - Federal State Unitary Enterprise Nalog-Service), Federal Treasury, DIT of Moscow, the Ministry of Finance, Ministry of Transport (also on behalf of "subspecies" - Rostransmodernization and ProtectionInfoTrans), FCS (conducts procurement the subveda – TsITTU), the Social Insurance Fund, Russian Post and one of Territorial Departments of Federal Compulsory Health Insurance Fund. Considering that all state customers already have products and the equipment of Oracle in the IT infrastructure, they without problems will continue purchases of "zapreshchenka", reasoning need of such purchases with the requirement of compatibility with the existing infrastructure.

However, not all customers intend to use such "indulgence" is termless. So, in Federal Treasury in the next three years are going to carry out centralization of one of the largest business systems – ASFK, - which not just uses Oracle DBMS in the architecture, and actually is the customized solution - "superstructure" over the ERP system of Oracle E-Business Suite.

GIIS "Electronic Budget" by creation there of the corresponding subsystem is going to carry out centralization of ASFK (now a system has the decentralized architecture distributed on 85 regions of the Russian Federation) as transfer of business processes of ASFK on Wednesday.

The deputy manager of Treasury Alexander Albychev told about it in the interview of TAdviser which took place in February, 2019:

Yes, it will be Postgres Pro entering the register of the Russian software. On it we already made a subsystem of the electronic budget for accounting, document flow of a management subsystem money and management subsystems expenses on treasurer maintenance. Actively we interact with developers of this DBMS. I think, as for them it is a serious call too. If they successfully pass a test with such complex high-loaded system, many will believe in them. On the other hand, naturally, that this work is not free, and we, thus, invest in them. They receive feed, can take more qualified specialists and further develop the system. The correct circle turns out, but not fast – several years.

Already by preparation of the overview for the publication there was news^[8] that gradual transfer of the information systems to use of Postgres Pro DBMS plans one more state department - FCS:

As it became known, the Federal Customs Service (FCS) intends to pass to Postgres Pro DBMS developed by domestic company Postgres Professional on the basis of the free extended PostgreSQL DBMS. About it editions were told by Denis Tereshchenko, the deputy manager of FCS of Russia who is responsible in department for an IT block. For March, 2019 FCS within the comprehensive program of development till 2020 implements a number of projects on upgrade the of an information system — the top manager notes. — The automated system of commission of customs transactions which will begin to be applied in customs authorities in 2020 is developed, different workflow systems and electronic interaction within SIEI which start is planned in 2019 are implemented. In these projects as DBMS Postgres Pro use is put".

However, analysts of TAdviser noted that in the publication there is no accurate statement that Oracle DBMS will be replaced in the main GIS of FCS - EAIS TO within which operating costs just and technical support services of software of Oracle are bought. Moreover, in that part of the text where EAIS TO is mentioned, there is a fragment in which specific technical parameters by which Postgres Pro DBMS loses Oracle are noted.

Analysts of TAdviser consider that this publication is material just on duty designed to show that the course towards import substitution of software in the Russian state structures exists and the movement in this direction happens.

To state companies for which not strict prohibition on purchase of foreign software works so far and only the recommendation on maximum (up to 70%) to transition on Russian software and the equipment by 2024, so far in general especially there is nothing to worry – they still have 2-3 years during which it is possible to increase the mass of the used software and a HSS of Oracle, and further (as it already and occurs regularly now) to continue purchases of foreign technology products under the pretext of need of ensuring processing compatibility with the existing IT infrastructure.

The Russian Railway is model of the future of technical support of Oracle?

Among all big customers stands the Russian Railway alone. Purchases of the company three times (1 time in 2015 and 2 times in 2016) got to rankings of TAdviser. In 2015 services of STP Oracle for the Russian Railway were provided by FORS for 77.8 million rubles (the 10th place in a ranking of TAdviser). In 2016 suppliers of licenses and certificates of STP Oracle for the Russian Railway were Croc companies (nearly 94 million rubles, the 7th place in a ranking) and Corus Consulting (12.3 million rubles, the 41st place in a ranking).

At the same time the last on time and the largest purchase of the Russian Railway (NMTs of 430 million rubles, the price of the contract of nearly 362 million rubles) which took place in 2017 for technical reasons did not get to a ranking of 2017 (if it was included in a ranking, then would take the high 8th place there).

Strictly speaking, it was no purchase of services STP or RTP – it was called in the tender documentation purchase of services of functional support. TAdviser told about this purchase in March, 2017 (see the publication "The Russian Railway Ceased to Pay Technical Support of Oracle". TAdviser, 03.2017).

Within the contract signed for term in 5 years from 2017 to 2022, the customer gets functional support of software products of Oracle, such as Oracle Database Internet Application Server, Partitioning, Data Mining WebLogic Server and so forth Besides, in initial phase of performance of the contract the service provider had to carry out complex technical audit of the used software and also provide optimization and development of the existing IT systems of the Russian Railway based on software of Oracle.

The chief information officer of the Russian Railway Evgeny Charkin told:

The announced competition does not provide acquisition of technical support at Oracle, but provides acquisition of functional support of software environments of the corporate information systems (CIS) using software of Oracle. Such format of the tender is caused by results of the carried-out GVTs of the analysis which showed that more than 90% of the used software of Oracle have versions which the Oracle company does not support any more or stops technical support in 2016.

According to Charkin, at the same time, specialists of GVTs, on the basis of historical data of support, defined necessary aspects and organizational requirements to support of the software environments using software of Oracle. These aspects and requirements were completely reflected in terms of reference as a part of the tender documentation. At the same time, the initial cost of the certificate of functional support of software environments specified in the tender documentation was created as a result of the conducted surveys among the participants of IT market capable to provide the support level necessary for the Russian Railway.

It is quite possible that in the near future a number of the Oracle softwares today's organizations users (especially such where specific releases of vendor software are recorded and do not change) will select for itself a way by an example of the Russian Railway.

Questions without answers

Despite very careful work of the analysts of TAdviser on this overview, a number of questions belonging to the considered subject was left without answers. Below these questions are formulated, as stated, for memory – TAdviser will investigate the available data more deeply and to monitor the appearing information to close a Gestalt.

DIT of Moscow

In 2014 DIT of Moscow made 3 purchases of software and technical support services of Oracle (all of them are mentioned in a ranking of TAdviser) for the total amount more than 255 million rubles. These purchases were directed to expansion of use the AIS, working in several departments of the Government of Moscow – DIT, finance department, department of city property and department of competition policy. For what specifically the AIS made purchases of licenses, it is not specified, but the weight of evidence suggests that it was EDMS of authorities of Moscow and some financial ICs.

In 2015 no purchases of DIT of Moscow in the direction of Oracle are revealed though, at least, the next purchases of technical support services for Oracle DBMS used as a part of EDMS Governments of Moscow, and the AIS of other departments had to be carried out. Perhaps, failure from purchase of technical support of Oracle for EDMS of Moscow was the conscious choice of DIT since at this time work on transfer of all Moscow EDMS to PostgreSQL DBMS was already conducted (this transfer prepared one and a half years and took place in May, 2017^[9]).

In 2016 and 2017 of DIT of Moscow made two large purchases of software of Oracle:

• In 2016 – purchase for 310 million rubles of additional licenses softwares of Oracle for the AIS "Uniform Parking Space of Moscow" (AIS EPP). As it was mentioned in^[10] of D-Russia devoted to this purchase, the AIS EPP was created in 2012. Therefore, no later than 2014 for DBMS as a part of this AIS it was required to buy annually services of standard technical support, however, such purchases are also not detected in EIS of state procurements;
• In 2017 – purchase with the starting price of 480 million rubles (the contract was signed for the amount of 458 million rubles), within which additional licenses softwares of Oracle for the benefit of the department of city property (DCP) were bought. From the publication^[11] of Kommersant devoted to this purchase followed that, at least, concerning systems operated in DGI failure from software Oracle in the near future is not planned.

In general, a situation with purchases of technical support services of Oracle in DIT of Moscow rather strange – such purchases were almost not in all 5 years of observations. Only in 2014 in specifications of three purchases mentioned above it is possible to find out that, in addition to new licenses (and the year technical support relying to them), were bought as well technical support services for earlier purchased licensed software (the analysis for what software the technical support was bought, on the basis of the available data cannot be carried out).

Two options are possible:

• or technical support services after all were accurately bought every year, but according to formulations of objects alone of such purchases in EIS it is impossible to determine the facts of such purchases;
• or DIT of Moscow consciously does not buy a technical support service of software of Oracle (though if to judge by contracts of 2014, such purchases after all happen).

During one more research conducted by TAdviser now it is established that one of key IT systems of Moscow – Uniform automated information system of biddings (EAIST 2.0) - is constructed also based on DBMS and other products of Oracle (in particular, Oracle BI and Oracle Coherence). However, traces of purchase of licenses and services STP/RTP for the products of Oracle which are a part of EAIST in the published government contracts were not vyvleno. Perhaps (as it was already noted), these purchases "are packed" somewhere deeply in specifications of total package procurement contracts on development and support of EAIST. According to experts of TAdviser, volumes of such purchases for EAIST can be measured by hundreds of millions of rubles a year and to be comparable, for example, with similar purchases of Rostelecom.

Federal Treasury of the Russian Federation

It is known that in Treasury of software of Oracle it is most actively involved in structure of internal financial systems – the Automated System of Federal Treasury (AS FK) constructed based on Oracle E-Business Suite, and the System of Remote Financial Document Flow (SRFDF) used in the distributed work of all Territorial Departments of Treasury.

The largest contract relating to software of Oracle in Treasury was concluded in 2014 - it was purchase of technical support services for AS FK and SUFD for a period of 2 years (till December, 2015) and worth 693 million rubles. In 2016 and 2017 contracts by cost, respectively, 277 million rubles and 221 million rubles were signed that was significantly lower (80% and 63%) than the annual average cost of support in 2014-2015, but, in principle, was in one order of the prices. However, the only revealed technical support contract of Oracle in 2018 had the cost of 61 million rubles, and the contract of 2019 – 65 million rubles.

These two last contracts generate questions – whether the Treasury really sharply cut down expenses on technical support of Oracle, whether the corresponding expenses are somewhere in depth of total package procurement contracts.

You See Also

• The largest state procurements of software products and services of Oracle in Russia in 2017
• The largest state procurements of products and services of Oracle in Russia in 2016
• The largest state procurements of products and services of Oracle in Russia in 2014 and 2015
• Automation of purchases: experience of the largest customers, structure of the market, trends. Research of TAdviser

Notes